Asian Shares Mostly Down; S&P/ASX Slips To 6-Week Lows

ShriNavaratnam

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SINGAPORE (MarketWatch) -- Asian shares were mostly lower Wednesday with the Australian market falling sharply on losses in financial and materials stocks and China's shares down on continued concerns over bank lending restrictions.

Khoon Goh, senior economist at ANZ bank in Wellington, said the markets are likely to be in limbo ahead of the outcome of the U.S. Federal Reserve's meeting later in the global day. "With so much going on, there is a sense that markets are somewhat undecided about what it all means," he said, referring to concerns about growth in China, lending limits on Chinese banks and proposed restrictions on U.S. banks.

Japan's Nikkei 225 was down 0.3%, Australia's S&P/ASX 200 was down 1.6% at 4643.3, South Korea' Kospi Composite was down 0.6%, the Shanghai Composite was 0.1% lower, Hong Kong's Hang Seng Index rose 0.2% and India's Sensex was 1.2% lower. Dow Jones Industrial Average futures were up 26 points in screen trade.

Shares in Australia hit a six-week low of 4628.6 after resuming trade following Tuesday's public holiday, with losses led by miners, banks, and the consumer staples sector. The market was playing catch-up with sharp losses for Asian shares while Sydney was off.

Among materials plays, BHP Billiton was down 2.0%, Rio Tinto fell 4.3%, Fortescue was down 5.6%, and Newcrest Mining gave up 1.8% on U.S. peer weakness. Banks were also hurt by losses in U.S. peers, with Westpac off 2.3% and other major banks down more than 1.0%.

Woolworths fell 1.7% after its second quarter sales disappointed with a 4.1% rise. "I think we were due for a correction and Wall Street now seems to be viewing the glass as half empty," said BBY senior institutional trader Peter Copeland.

China shares extended losses as banks yet again led falls on continued concerns over lending restrictions. "The index will probably remain sluggish until slightly before Chinese New Year, when lending restrictions would be loosened," said Shen Yang at Orient Securities.

People familiar with the situation told Dow Jones Newswires in recent days that 3 major banks - ICBC, Bank of China and China Citic Bank - had suspended lending. ICBC was down 1.8, Bank of China 1.0% lower and China Citic Bank was off 2.7%.

In Japan, Toyota fell 2.6% after the company's U.S. division suspended sales of eight models recalled to fix potential problems with sticky accelerator pedals. "This recall problem is not only damaging to the company's reputation, but it could also hurt its U.S. sales figures," said SMBC Friend Research Center analyst Shigeru Matsumura. Nissan Motor was off 0.1%.

Korean shares continued to be weighed by tightening concerns in China. Posco was off 1.4% and Daewoo Shipbuilding was down 1.0%. LG Electronics fell 1.4% ahead of the release of its fourth quarter earnings due later.

The Kospi was choppy in early trade after Yonhap News Agency Wednesday cited officials as saying North Korea fired artillery near a no-sail zone. The South Korean military responded with their own fire shortly after, Yonhap reported.

In foreign exchange markets, the U.S. dollar and euro were lower against the yen on Japan exporters' account settlement orders as well as risk aversion amid weaker global stock markets, said UFJ Trust and Banking senior dealer Hideaki Inoue. The euro was trading at $1.4074 against the dollar, from $1.4077 late in New York Tuesday, and was at Y125.62 versus the yen from Y126.19. The dollar was trading at Y89.23 against the Japanese currency, from Y89.66.

The Australian dollar rose against the greenback and the yen, on news the consumer price index rose a higher-than-expected 0.5% in the fourth quarter of 2009 from the third quarter and up 2.1% from a year earlier. The data reinforced expectations the Reserve Bank of Australia will raise rates when it meets next week.

The Australian dollar was at US$0.9016 against its U.S. counterpart from about US$0.8910 before the data.

Lead March Japanese government bond futures were down 0.04 at 139.34 points. The benchmark 10-year cash JGB was up 1.0 basis point at 1.325%.

Spot gold was at $1,100.30 per troy ounce, up $2.000 from the New York close. March Nymex crude oil futures were 3 cents lower at $74.68 per barrel on Globex.

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